A credit score increase can be a welcome surprise, but it may have you wondering why. Your credit score may go up for several reasons, and they all have to do with changes to the information on your credit report. Common reasons for a score increase include: a reduction in credit card debt, the removal of old negative marks from your credit report and on-time payments being added to your report.
The situations that lead to score increases correspond to the factors that determine your credit score. For instance, the removal of late or missed payments from your credit report after a certain period can lead to score growth because payment history is the single most significant factor in your score.
Read on to learn more about the reasons why your credit score might have gone up.
Have you ever checked your credit score and been pleasantly surprised to see it went up by 21 points or more for no apparent reason? You’re not alone. Many people have experienced a similar boost in their credit scores without taking any specific actions to improve it. While a 21 point increase may seem minor, it can make a difference when applying for loans or credit cards. So what causes these spontaneous jumps in credit scores? There are a few key factors that likely contributed to the rise.
Payment History Improved
The biggest factor impacting your credit score is your payment history accounting for 35% of your overall score. When positive payment information gets reported to the credit bureaus it can quickly give your score a boost. For example, if you have any late payments on your record but have been diligently paying all your bills on time for the past 6 months, once that positive data hits your credit reports, your score will likely trend upward. Paying down balances can also have an incremental positive effect.
Even one late payment falling off your credit report after 7 years can bump up your score, including by 21 points or more. The key is developing and maintaining a strong habit of on-time payments. If you recently improved your payment activity, that change is probably a primary reason behind your credit score increase.
Credit Card Balances Decreased
Your credit utilization ratio also heavily influences your credit score, accounting for 30% of the calculation. This ratio compares your total outstanding credit card balances to your total credit limits. Experts recommend keeping your utilization below 30%. As you lower your revolving credit card debt, your utilization decreases too.
For example, if you had a $5,000 balance on a card with a $10,000 limit (50% utilization) but paid it down to $2,000 (20% utilization), that could result in a score improvement of 21 points or more, depending on your overall situation Reduced utilization signals to lenders that you manage credit responsibly
Credit Inquiries Fell Off
When you apply for new credit, the resulting inquiry can cause a small, temporary drop in your credit score. However, these inquiries only impact your score for 12 months. Once a hard inquiry falls off your reports after a year, your score will rebound—potentially by 21 points if you only had one inquiry. Too many applications in a short timeframe represent greater risk. But as inquiries age, their negative influence dissipates.
Credit History Length Increased
The average age of your credit accounts is also factored into credit scoring models. In general, the longer your credit history, the better. As your accounts naturally age over time, it builds trustworthiness. For instance, if you’ve had a credit card for 10 years, keeping it open helps your score, even if you use it sparingly. If your credit history recently reached a new milestone, like going from 5 years to 7 years, it likely contributed to your 21 point rise.
Credit Mix Expanded
A final 10% of your score depends on your credit mix, meaning the different types of loans and credit cards you have. Lenders like to see experience managing installment loans (like mortgages, student loans and car loans) and revolving credit (like credit cards). Opening a new credit product type previously missing from your profile can provide a small score bump by demonstrating you can handle diverse credit types.
For example, your score may benefit from opening your first rewards credit card when you already have an installment loan. Having a good mix shows lenders you can successfully manage different credit products. Just be sure to use new credit judiciously and make payments on time.
How to Keep Your Credit Score Rising
While a 21 point credit score increase is positive, you can take additional steps to continue boosting your score over time:
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Check credit reports for errors: Dispute and remove any inaccurate information holding back your score.
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Lower utilization: Pay down balances to keep utilization below 30%, ideally even lower.
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Make payments on time: Pay all bills on time, every time to benefit payment history.
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Leave old accounts open: Keep longstanding credit cards open to build up average age of accounts.
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Limit new applications: Apply for new credit only when needed to avoid too many hard inquiries.
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Monitor credit: Review credit reports and scores regularly to catch any issues.
With diligent credit management, you can turn a 21 point score lift into the start of an upward credit score trend. Paying attention to factors like payment history, utilization and credit history length will provide the best opportunity see your score steadily improve over the months and years ahead. The higher your score, the better your chances at approval for credit and loans with desirable rates and terms.
Your Credit Utilization Ratio Decreased
Your credit utilization ratio is the amount of revolving credit youre currently using compared with your total credit limit. Scoring models calculate credit utilization based on your individual credit card account balances as well as your total utilization across all credit card accounts. Credit utilization is a major component of the “amounts owed” factor, which makes up 30% of your FICO® ScoreÎ.
When you pay off a credit card balance, your utilization on that card drops to zeroâand your overall utilization drops too. That generally has a positive effect on scores (though showing you can manage credit cards on a regular basis means that a low overall ratio is better than zero). Since account information is updated with the credit bureaus after the end of a billing cycle, you may not see a score change until 30 to 45 days have passed after reducing your credit utilization.
Keeping your credit utilization below 30% of your available credit can help you improve your scores, and the lower, the better. Paying down your balances is the most straightforward way to reduce your credit utilization, but you can also request that a credit card issuer increase your credit limit. An increased limit can help you reduce your utilization even if you maintain the same credit usage. However, you should resist the temptation to use that increased limit to add to your debt. This could leave your utilization ratio worse off than before and result in more interest charges. After requesting a credit limit increase, you might see a brief drop in your score if the issuer had to make a hard inquiry in order to review your credit report as part of its decision-making process.
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ÎCredit score calculated based on FICO® Score 8 model. Your lender or insurer may use a different FICO® Score than FICO® Score 8, or another type of credit score altogether. Learn more.
How Can I Find Out Why My Credit Score Just Dropped?
FAQ
Why did my credit score randomly go up 20 points?
New payment behavior is a common cause for credit-score fluctuation. Additionally, when making payments on an installment loan, mortgage or auto loan, you are decreasing the amount of overall debt. That could also cause an increase in your credit score.
Why did my credit score suddenly increase?
New credit.
Changes to these and other factors on your credit report are what result in adjustments to your credit scores. That data could also include balance changes, the opening of new accounts, payments on existing accounts or closed accounts falling off your credit report after a period of time.
How can I raise my credit score to 21 points?
You could elevate your credit score with tips such as making on-time payments, paying credit card bills more than once a month, becoming an authorized user and fixing credit report errors.
What’s the most your credit score can increase in a month?